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Reported mere minutes ago (after the bell), Google has purchased YouTube for $1.65 billion in stock. Both companies have approved the deal, which should officially close in the fourth quarter and YouTube’s 65 employees will remain with the company at YouTube’s San Bruno headquarters.
According to Internet research firm Hitwise, YouTube has about a 46 percent share of the online video market.
For Google, the purchase of YouTube gives the company the ability to tap into the potentially lucrative online video and social networking markets. Some analysts have criticized Google for relying too much on advertising tied to keyword searches.
The combination of Google and YouTube could further strengthen Google’s dominance in online advertising, giving it an edge over rivals such as Yahoo!, Microsoft’s MSN and News Corp., which owns the social networking site MySpace. Some analysts said Monday that Yahoo, Microsoft and News Corp. also had probably expressed interest in buying YouTube.
Google stock in after-hours trading: 427.23 1.77 (0.41%)
The official release is here and some snippets include:
“The YouTube team has built an exciting and powerful media platform that complements Google’s mission to organize the world’s information and make it universally accessible and useful,” said Eric Schmidt, Chief Executive Officer of Google. “Our companies share similar values; we both always put our users first and are committed to innovating to improve their experience. Together, we are natural partners to offer a compelling media entertainment service to users, content owners and advertisers.”
“Our community has played a vital role in changing the way that people consume media, creating a new clip culture. By joining forces with Google, we can benefit from its global reach and technology leadership to deliver a more comprehensive entertainment experience for our users and to create new opportunities for our partners,” said Chad Hurley, CEO and Co-Founder of YouTube. “I’m confident that with this partnership we’ll have the flexibility and resources needed to pursue our goal of building the next-generation platform for serving media worldwide.”
When the acquisition is complete, YouTube will retain its distinct brand identity, strengthening and complementing Google’s own fast-growing video business. YouTube will continue to be based in San Bruno, CA, and all YouTube employees will remain with the company.